The noble Lord said: My Lords, in moving this amendment I shall speak at the same time to Amendment No. 17. The purpose is to make sure that the Minister does not undervalue the assets of AEA Technology. My noble friend Lord Peston spoke earlier about that matter.

The main asset of AEA Technology is intellectual, and valuing intellectual property is very difficult and complicated. In fact, the intellectual properties are state assets and represent a considerable state investment in R&D. Therefore, it would seem sensible that before they are sold, some effort should be made to find out how much state money has gone into creating that intellectual property.

There is a widespread belief that the nation has been sold short on some privatisations by undervaluing the businesses. This amendment is designed to stop the Minister adding to that impression by assessing the cost. The Minister may not want to divulge the valuations but I am sure that he would want to know the costs of building up that intellectual property so that he has an approximate idea of the cost of what he is selling. I beg to move.

Lord Clinton-Davis: My Lords, before the Minister responds to the point made so effectively by my noble friend, I want to stress that we are dealing with an industry which is in a way sui generis. It has been conceded over and over again during our debates and

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in discussions elsewhere that the essential asset of this industry lies in the skills and expertise of the employees. That being the case, whatever reservations the Government may have about the concept of worker-directors, or the whole argument in that respect, they do not bear analysis in relation to this particular industry.

That, I believe, is the essence of the case that we seek to make with this amendment. I hope that the Minister will give us not just comforting words but some substance in response to the point that was made by my noble friend when he moved the amendment.

Lord Fraser of Carmyllie: My Lords, the noble Lord said a little about the first amendment and the wording of lines 9 to 12 of Schedule 1. It follows that used in previous privatisation legislation where provision for a transfer scheme has been made. It removes any possible doubt that the property, rights and liabilities which are to be transferred can be defined generically as well as, or instead of, being itemised.

However, the noble Lord's more substantial point is to be found in relation to Amendment No. 17, which would require the Comptroller and Auditor General to examine and certify a valuation of the property, rights and liabilities to be transferred under the scheme and to lay a copy of that valuation before Parliament before a transfer scheme could come into force. I hope that at the time that the noble Lord tabled the amendment, he did not know that I would make my announcement in relation to the first amendment and that the transfer scheme is to a single successor company of all the shares owned by the Secretary of State. I hope he will appreciate that in some respects it will be an odd exercise for the Secretary of State to undertake that task when that is what he is doing. More broadly, I commend the noble Lord for his concern to ensure that the taxpayer is not shortchanged.

I hope that I have now made clear that as one of their main objectives in selling AEA Technology the Government have to secure value for money for the taxpayer. That is why we are not yet prepared to close off any sales options. It would seem inconsistent to ask us, as was being asked at one time, to do just that while at the same time taking the approach that the noble Lord takes in this amendment.

Perhaps I can offer three points to the noble Lord which may be of assistance in understanding our approach. First, as part of its ongoing responsibility for the audit of UKAEA, the Office of the Comptroller and Auditor General will wish to satisfy itself that the assets owned by UKAEA at the point the scheme was made are properly accounted for, either by remaining in UKAEA or being placed with the successor company. In that way nothing will fall between the cracks: assets will go with either the authority or the successor company.

Secondly, as I have already indicated, the making of a transfer scheme will not involve any assets leaving the public sector. The successor company will be owned by the Secretary of State. Thirdly, when it comes to the sale, the value of the assets in AEA Technology's balance sheet will be only one of the elements involved in determining

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the level of proceeds and gauging whether it represents best value for money for the business. Certainly no useful purpose will be served by a special valuation exercise carried out several months in advance of the sale. The only result of that would be to introduce a further hurdle in the scheme-making and sale process and generate needless complexity, uncertainty and delay. AEA Technology will be valued primarily by reference to its current financial performance and also its future profitability. That valuation will reflect the current value of its IPR.

I hope that explains fully the position to the noble Lord and that he will appreciate that in a sense things have moved on from the time when he tabled the amendment, given the announcement I made as regards the first group of amendments.

Lord Haskel: My Lords, I thank the Minister for that response. I welcome the undertaking he gave at the beginning of the debate that there will be a unitary privatisation. However, I felt it would be useful to raise this point because when one is selling intellectual property it is often useful to know what the cost of it is. It is a difficult item to value and the major element in the sale is intellectual property. Having made that point, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 17 not moved.]

Lord Haskel moved Amendment No. 18:

Page 7, line 34, at end insert
("( ) A transfer scheme shall not provide for the transfer of the employer's rights or liabilities in any contract of employment to any person unless that person is a company whose articles of association require one or more of its directors to be a person appointed by the Secretary of State from amongst person appearing to the Secretary of State to have had wide experience in, and shown capacity in, the organisation of workers.").

The noble Lord said: My Lords, in moving Amendment No. 18, with the leave of the House I shall speak also to Amendment No. 19. As we have said before, this is a people business. The maintenance of good morale and employee relations is vital to its success, otherwise technical staff will leave or lose their creativity.

In other privatisations that aspect of managing the business has been rather poor. Because it is a people business we are particularly anxious that that should not be repeated in the privatisation of AEA Technology. The amendment goes back to the Atomic Energy Authority Act 1954, which gives the right to employees to have a representative on the board, and should help to maintain morale. At the same time, it is in keeping with the European directive on consultation. By including the amendment in the Bill, the Minister can demonstrate his European Union credentials. I beg to move.

Lord Fraser of Carmyllie: My Lords, I am sure noble Lords will agree with me that real worker involvement in, and commitment to, a business is desirable for any company. Companies should be encouraged to engage in a dialogue between management and employees. Indeed, many companies currently engage voluntarily in such activities. But the operative word in that sentence is "voluntarily".

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The Government's general view is that the right people to manage the business are the management. While we welcome and encourage genuine, voluntary worker participation, we do not try to dictate to firms how they should run their affairs. Each has to develop the form of employee involvement best suited to it. We oppose the imposition of prescriptive, rigid structures which do not reflect the needs of the business and are not in the interests of either employers or employees.

That is a general proposition, but let me reiterate. The present management of AEA Technology is committed to a full programme of consultation and explanation to all employees through a range of mechanisms. AEA Technology is a people business and its people are its greatest asset. The present management fully recognises that; and so do we.

The Government believe that privatisation represents the best way forward for the business and its staff. I want AEA Technology to succeed in the private sector and I believe it will do so only if it has the freedom and flexibility to take advantage of the enormous opportunities in the market.

The board of a privatised AEA Technology will need to reflect the mix of skills and expertise necessary to manage a dynamic and forward looking company. It will want to involve its staff more directly in the development of the business. But how it does so is something best left to the company. It is not a matter for the Government, less still for statute.

While I appreciate the sentiments behind the tabling of these amendments, I believe that they can be dealt with on a voluntary, rather than a legislative, basis. That answer may not come entirely unexpectedly to the noble Lord, but I can assure him that the present management understands the real need and desirability of consultation.